The role of audit committee characteristics in improving the risk disclosure of companies examining the moderating role of audit quality

Mohamed Samy El-Deeb (), Yomna Alarabi () and Amal Mohamed ()
Additional contact information
Mohamed Samy El-Deeb: October University for Modern Sciences and Arts (MSA)
Yomna Alarabi: October University for Modern Sciences and Arts (MSA)
Amal Mohamed: October University for Modern Sciences and Arts (MSA)

Future Business Journal, 2024, vol. 10, issue 1, 1-20

Abstract: Abstract This paper examines the association between audit committee characteristics (ACC) and risk disclosure (RD) of firms, focusing on the moderating effect of audit quality (AQ). The importance of RD to investors and stakeholders is that such a practice offers a better evaluation of the overall risk profile of companies. Based on agency theory complemented by the resource dependence theory, this paper therefore suggests that effective audit committees have an effect of reducing information asymmetry while increasing audit quality monitoring capacities and consequently enhance risk disclosure practices. In this respect, the literature sources were reviewed, and a hypothetical framework was developed to test the hypotheses. The sample selection comprises 54 companies with non-financial companies listed in the Egyptian Exchange Market, EGX100, for the period 2018 to 2021, which amounts to 216 observations. According to the results, ACC, such as size and financial expertise, are significant for RD, while ACC relating to meetings and independence are less important for RD. The study further established that AQ moderates the relationship between ACC and RD, implying that the significant influence of ACC is stronger when AQ is high. These inferences are of essence to policy makers and companies in understanding the implication of ACC on RD and the relation to high-quality audits in improving the effectiveness of audit committees. It underlines the importance of audit committees in giving assurance about transparency and accountability in financial reporting.

Keywords: Audit committee characteristics; Risk disclosure; Audit quality (search for similar items in EconPapers)
JEL-codes: G32 M14 O16 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1186/s43093-024-00417-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:futbus:v:10:y:2024:i:1:d:10.1186_s43093-024-00417-2

Ordering information: This journal article can be ordered from
https://fbj.springeropen.com/

DOI: 10.1186/s43093-024-00417-2

Access Statistics for this article

Future Business Journal is currently edited by Soad Kamel Rizk and Hayam Wahba

More articles in Future Business Journal from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().